The FairTax Act is Revolutionary
Jun 4th, 2006 by Alex
The FairTax Act is proposed legislation that would eliminate the Internal Revenue Service (IRS) and do away with all income taxes and payroll taxes. Instead, a national sales tax would finance the government.
After reading The FairTax Book, I’m convinced that FairTax would be a better way of funding our government. Here’s why.
FairTax is simple.
We currently have volumes and volumes of tax code. The result is an overly-complicated situation in which many people would rather pay others to help them pay their obligation to Uncle Sam. A few words about complexity: the IRS recently reported that General Electric’s tax return would have been 24,000 pages long had they not filed electronically. Think of all the people’s efforts that went into that…
FairTax is simple, and that’s the best part. A national sales tax on all new products and services. A simple percentage that you’ll be able to see on every register receipt. That’s it.
FairTax is fair.
According to a recent two-page report (PDF) by congressional Joint Economic Committee, the top 50% of income earners pay 96.5% of all federal income taxes. Now how is it fair that the other 50% pays a mere 3.5% of it? It isn’t.
Under FairTax, more wealthy citizens pay taxes on their luxury purchases at the same rate as less wealthy citizens pay taxes on day-to-day items. There would be no additional taxes on that luxury car or yacht; you pay the same rate on it as a child would pay on a candy bar. Hence the “fair” name. Everyone pays the same tax rate on goods and services. No more of this tax bracket crap or special deductions pressed by high-dollar lobbyists.
FairTax kills April 15th.
Ask someone how much tax they paid last year and they’ll probably tell you that they got a refund. What about all those dollars withheld from their paycheck throughout the year? They probably won’t be able to tell you how much they paid. Just because you get a refund doesn’t mean you paid nothing; it means you let Uncle Sam borrow that extra $1,000 for the year, when it could have been earning interest for you.
Under FairTax, April 15th becomes a normal spring day devoid of any paperwork or fuss. Accountants could spend their time helping with investments rather than on ways to get a larger refund. The Government Printing Office wouldn’t have to produce any forms or instructions detailing how to fill out said forms.
FairTax has perks.
You will get a monthly check from Uncle Sam reimbursing you for the taxes you’d pay on life’s basic necessities like food, toiletries, etc.
The FairTax Act repeals all income taxes and payroll taxes, specifically:
- The individual income tax (including capital gains taxes and the alternative minimum tax)
- The corporate income tax
- All individual and employer payroll taxes including Social Security, Medicare and federal unemployment taxes
- The self-employment tax (a self employed person pays both the individual and the employer portions of Social Security and Medicare taxes)
- The estate and gift tax
What does this mean? You would get your entire paycheck every week (or two weeks), without any withholding. That’s right… no federal taxes taken out of your check. No money taken for Social Security or Medicare either. People think of the withheld money as not being theirs to begin with… scary and a shame. Under FairTax, all of that withheld money would be yours to take home and spend/save. How cool is that?
FairTax doesn’t change programs.
The structure of Social Security and Medicare aren’t affected, only the method in which the programs are funded. The same is true for any other government program.
FairTax discourages offshore business and encourges growth.
Wealthy people and businesses alike take their money offshore to avoid heavy taxation. That’s money that is effectively stripped away from the government and doesn’t benefit us as a whole, despite our citizens living here and benefitting from those still doing business here.
Under FairTax, there’s no reason to take money off-shore. It will bring U.S. comparies (doing offshore business) and foreign companies (seeking a competitive edge) back onto U.S. soil, fosting economic growth.
I like FairTax.
While I do recommend The FairTax Book to familiarize yourself with the FairTax Act, I didn’t want to write a book review. Amazon (linked above) has decent comments on the book, more detailed that I’d care to write. Fairtax.org also has written a brief synopsis of the FairTax Act, which I’d recommend highly (over my ranting).
While I’m no political pundit, I thought this was an amazing proposition with no visible downside. At worst, tax lobbyists would have to find other work on K Street. IRS employees would likely have lateral moves within the government. I’ve already written my representatives and the White House to express my desire for this bill. If you think this is as cool an idea as I do, Americans for Fair Tax has a decent web site that explains what you can do.
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No visible downside to Fairtax? Well look behind the Curtain.
Look behind the hype and distortions and half truths.
First of all, if you only read Fairtax book, you have only hype and horsefeathers — you read nothing of substance. In fact, Fairtax and HR 25 are two entirely different things. HR 25 is the proposed legislation — Fairtax is the hype and promises.
For example, in the Book, if you went by that, you would think everyone takes home their whole paycheck, that you would keep the money you used to pay into income taxes.
Well the book said that. But HR 25 says no such thing. IN fact, HR 25 people said they never even IMPLIED such a thing. But Boortz wrote it in his book, and virtually every Fairtax fan still thinks thats how it works. Boortz later wrote a “clarification” which he said your gross wages would be “readjusted downwards” . Where I come from, that means cut.
Yes, for Fairtax math to work, all employees all over the country would need to cut their gross pay 30%. That money is then given to the employer — kept by the employer, and used to lower the prices of all goods.
Now, thats not the picture you got from Fairtax. And Boortz is counting on that. Once Fairtax fans get sold on this ” magic wand” they tend to be mesmerized by it, even when later they found out many of the basic Fairtax premises were absurd.
And HR 25 says NOTHING about your wages being “readjusted”. There is nothing like that in there. This whole wage readjustment, all the math and predictions — thats all in the hype. Thats all the speculatoin and promises.
HR 25 is simply a national sales tax. A very high sales tax — in fact, the highest on earth. Thats what we should call this tax — the highest sales tax on earth. Becuase thats what it is. Fairtax claims all kinds of things, but none of those things are even mentioned in the bill.
So what you have are people who read the book, and think that reflects what the bill is. NO. Its not.
For example Fairtax — Boortz — will tell you “Fairtax completely untaxes the poor” and he will say “Fairtax makes sure no American ever pays a dime in taxes on the bare essentials of life”
Does HR25 have anything to say about this? There is NOTHING in there about untaxing ANYONE. IN fact, the first line or two of the act says THERE ARE NO EXCEPTIONS or exemptions. None.
THe poor pay it, the rich, the sick, the blind, whoever. IF a poor person gets cancer and has medical bills, he has to pay taxes on the surgery, chemo, rehab, everything, just like anyone else. (yes fairtax is on all medical cost — no exceptions)
Oh yes, there is a prebate. Huckabee said the prebate is what makes Fairtax work — without it, Fairtax would be impossible. Well the prebate is 200 a month per person - no extra if you get sick, — to use on your sales taxes. But your sales tax, just the sales tax, that the parents of a child with leukemia would have to pay, could be 200,000 dollars. What if the parents only make 30?
DOesnt matter to HR 25. There is no provision in there for any relief, nothing.
So you say you didnt see any downside to Fairtax from Boortz boo? Well, probably cause Boortz hid. He didnt tell you that cancer victims have to pay the worlds highest tax, did he? So you didnt know.
Oh, Neal covered how your “doctor visits” will have to “carry” the fairtax. SO like 10 dollars sales tax on your office visit. But he didn’t explain that mean if your spouse is in a car accident, and needs surgeries, your taxes could be more than your yearly income.
You didnt notice things like that when reading his book, YOu thought it was thorough, with no downside.
Fairtax has far more flaws than I have mentioned here. But the more you see of HR25, and think for yourself, the more you will realize Fairtax is just all hype. Fairtax isnt the plan. HR25 is the plan. Fairtax is the BS hype and mis information.
YOu are welcome to my bog — fairtax absurdity @ blogspot.com to find out more. I may be wrong — correct me if so. OR offer you thoughts, Thank you